I followed the iClarified instructions on how to jailbreak and unlock an iPhone 3G for 4.2.1 and also upgrade the baseband to iPad baseband 06.15.00.

I restored to the stock 4.2.1 IPSW in itunes, and then went through the motions with redsn0w 0.9.6b5, checking the box for iPad baseband.

Initially the phone gave me a springboard, I clicked on Cydia, and then the iPhone went into a loop of restarting, making the beepy noise every 10 seconds or so.

Did I do something wrong? I have seen other sites mention a custom firmware, because the stock 4.2.1 firmware doesn't support iPad baseband 06.15.00 by default. Did redsn0w take care of that, or do I need to find a custom firmware that someone has made?

Every time you upgrade or restore the phone, you have to use custom firmware or else the upgrade/restore probably won't work. So I suggest you try a custom IPSW. You can make by going in extras > custom IPSW in redsnow :)
and do not check the 'ipad baseband' and 'install cydia' at the same time. This might cause an issue too.

Ok, thanks. redsn0w 0.9.6b5 doesn't have the extras>custom IPSW, is there specific version of redsn0w that I should use? I've read some versions are more compatible with the 3G at 4.2.1 than others, I've downloaded a few different ones, but people seem to suggest 0.9.6b5.

Also, just to clarify, will redsn0w make the custom IPSW? When I went to that option it asked me to browse for an IPSW file. Do I give it the stock ISPW, and then it modifies it?

Scratch that... I didn't have to build a custom IPSW, I guess redsn0w figured things out behind the scenes, the phone finally works... yipee! I used 0.9.6rc19 as that is what I could find. Ultrasn0w worked for unlocking too.

This might be a silly question, but how do I sync music and contacts with iTunes? From what I understand my phone won't play nicely with iTunes now that it is JB'd with iPad BB. When I plug it in, iTunes wants me to restore to the backup that I created, but I think that will downgrade me back to 3.x.x and undo all of the jailbreaking.